Amazon reported Revenue of more than $400 billion USD in 2021.
- $469 billion USD to be precise.
How can a 28-year-old company have more Revenue than the annual Dutch budget?
- Which is a Rich Country.
Amazon's Strategy for Success
1. Be the First: Seeking New Markets and Expanding Rapidly.
- Initially, Amazon don’t look for profit, just to be the biggest player.
2. Be a Real Alternative: That can Compete with Traditional Solutions.
- Especially in New Markets that Co-Exist with Old Markets.
3. Ease Business Activities: Amazon offers different ways to make a living.
- To everybody, all around the world: Affiliate Links, Logistics for Retail, etc.
4. Maintain a Strong Cash Position: Especially, when Amazon Started.
- Amazon Faced the Dot-Com bubble Crash with enough Cash to Survive.
Of course, Amazon has taken very good decisions at the Right time.
- Synthesizing everything is impossible.
But, for us, these are the 4 Pillars that explain its Success.
- The Fourth Pillar is, probably, the most important, and few people know about it.
- We’ll explain it later.
Let’s see them in more detail:
Be the First
Jeff Bezos entered in the on-line Retail, not because he was a librarian that wanted to sell more books (at the beginning, Amazon was only an on-line Bookstore).
- In fact, he knew “nothing” about books.
He Perceived that, in the future, on-line Commerce would be very Popular.
- And he entered, without being an expert.
Ever since, Amazon has explored “New Markets” and tried to be the First:
- Cloud Services: Amazon Web Services.
- On-line Fresh Food: Amazon Fresh.
- Supermarkets without cashiers: Amazon Go.
Different Divisions of Amazon
What is interesting is that, some of these Markets are not related at all.
- Some of them belong to a Big Retail Market, but others don’t.
- Amazon Web Services, for example… or Alexa.
Jeff Bezos suspected that, Voice Interaction would be the next big thing (we don’t think so, by the way) and created Alexa.
Be a Real Alternative
One of the best things Amazon has done is to improve the Purchasing Experience.
- So the Clients feel Comfortable buying on its Platform.
Amazon is not just a good on-line Shop.
It is a good alternative to your Traditional Shop.
- It guarantees that, if your Product is damaged, they’ll replace it.
- It displays comments so you can check what other users think about a Product.
- It delivers your Purchases in a short period of time.
- And you can track where your Order is.
Sometimes your order can arrive the same day you purchase it
Amazon is a Real Alternative to your Traditional Shopping.
- It is not a Low-quality experience that you use because you have no alternative.
In fact, many people prefer to buy through Amazon that in Person.
And Amazon has this Philosophy in every Division of the Company.
- From Retail, to Web Services.
Be a Real Alternative.
Ease Business Activities
Amazon has helped millions of people to make a living through its platform:
- Buying and Selling on-line.
- With affiliate links (commissions for each product sold).
This is why lot of people get very involved with Amazon.
- Because they have a Business Relationship.
- Or even more: A Dependence Relationship.
Many Small Businesses have appeared Thanks to Amazon
For Businesses, Amazon offers:
- A Reliable and Secure Website Platform.
- An Excellent Logistics System.
- The Largest Showcase in the World.
Many people would argue that, on the other hand, many Small Businesses have disappeared because of Amazon.
That is True.
- And that is Why Amazon keeps a Low-Profile Marketing Strategy.
- We’ll talk about it later.
Maintain a Strong Cash Position
Few people know that, Amazon is what it is, thanks to a Right Decision, at the Right Time…
- … And Good Luck.
- Whether you like it or not, to be Successful, you need Luck.
In 2000, just days Before the Dot-Com Market Crash, Amazon Raised more than $600 million dollars in bonds.
When Amazon Raised $600 million just before the Market Crash (Red Arrow).
The Right Strategy that Amazon followed was to Maintain a Solid Cash Position.
Wasn’t it Luck?
- Of course! But also a very good Decision.
Luck is important, but you have to do things Right.
- Behind every success you’ll always find Luck.
- Being at the Right Time with the right Product, at the Right Country…
That allowed Amazon to Survive the Market Crash and tackle the entire online Retail Market.
- With little or no Competition.
But, to be worth more than a Trillion dollars you need a Marketing Strategy.
- Or… Not?
Amazon is not know for its Marketing Campaigns.
- With notable exceptions, of course.
What Marketing Strategy does Amazon use?
Marketing Strategy of Amazon
Unlike many other companies, Amazon has a Self-Protective Marketing Strategy.
One of its Main goals is to Reconcile with its Criticism.
- Lot of People accuse Amazon of Destroying Traditional Retail Jobs and Businesses.
- And creating, instead, thousands of low-paid jobs.
How does Amazon do this?
Keeping a Low Profile
Amazon never, or hardly ever, Brags.
- Compared to other Companies that Claim to be the Best in their Markets.
Amazon never claims that:
- It is Changing the World for the better (many companies claim this).
- It is a Smart Company.
- It is Synonym with Happiness (as Coca Cola does).
It never uses “Pretentious” statements.
Because Amazon knows that, it would lose, more than gain, with these Campaigns.
- When you are at the centre of public debate… Better not to draw attention.
Instead, it uses another Strategy (which we’ll now explain):
- Amazon highlights that it can be of great help for Everybody.
Amazon is for Everybody
Amazon has not associated its Brand to “Uniqueness” or “Being different”.
- As Apple does.
On its Commercials, you find:
- People of different Races, Sexes and Cultures.
- Wealthy and Humble People.
- Young and Adults.
Amazon Targets Everybody.
In this way, Amazon transmits that, no matter Who you are, Amazon can help you.
- In one way or another.
Also, you can see that in many commercials, Amazon talks about Employees who are Happy in the Company (Amazon).
- Truckers, Distributors, etc.
Once again, this is a Strategy to Reconcile with the criticism.
- And Highlight that Amazon is also Good for its Employees.
As you can see, Amazon’s Business and Marketing Strategies had a lot to do with the Self-Protection of the Company.
- Cash protected it from Market Volatility.
- Keeping a Low Profile, is protecting it from certain Criticism.
You can think whatever you want about Amazon.
But, the Fact is, that is is one of the biggest Companies in the world, and we can learn a lot from its Success.